The shale gas revolution is firing up an old-fashioned American industrial revival, breathing life into businesses such as petrochemicals and glass, steel and toys.
Consider the rising fortunes of Ascension Parish, La.
Special Report
The new boom:
Rise of natural gas
The shale gas revolution is firing up an old-fashioned American industrial revival, breathing life into businesses such as glass, steel and toys.
The new boom: Shale gas fueling an American industrial revival
MLADEN ANTONOV/AFP/GETTY IMAGES - Workers change pipes at a drilling rig exploring the Marcellus Shale outside Waynesburg, Pa. in April 2012.
Shale gas production is increasing.
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Methanex Corp., which closed its last U.S. chemical plant in 1999, is spending more than half a billion dollars to dismantle a methanol plant in Chile and move it to the parish.
Nearby, a petrochemical company, Williams, is spending $400 million to expand an ethylene plant. And on Nov. 1, CF Industries unveiled a $2.1 billion expansion of its nitrogen fertilizer manufacturing complex, aiming to displace imports that now make up half of U.S. nitrogen fertilizer sales.
These companies all rely heavily on natural gas. And across the country, companies like them are crediting the sudden abundance of cheap natural gas for revving up their U.S. operations. Thanks to new applications of drilling technology to unlock natural gas trapped in shale rock, the nation’s output has surged and energy experts almost unanimously forecast that prices will remain low or moderate for a generation. The International Energy Agency says that by 2015, the United States will overtake Russia as the world’s biggest gas producer.
“The supply of natural gas and the price are the driving factors, and we’re swimming in natural gas down here,” said Mike Eades, president of the Ascension Economic Development Corp.
Ascension Parish falls inside the Haynesville geological region — one of the nation’s big shale gas prospects.
“It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago,” U.S. Steel Chairman John Surma said in a speech this year.
Industrial companies are betting that the surge in the domestic production of natural gas is much more than a blip. Cheap and plentiful supplies of natural gas are flooding the U.S. market, and prices in the United States are as low as a quarter of what they are in Europe or Asia.
“For the foreseeable future, thanks to the recovery of vast U.S. underground gas deposits of shale, natural gas is likely to remain 50 to 70 percent cheaper in the U.S. than in Europe and Japan,” said a recent report by the Boston Consulting Group.
“That will translate into significantly lower costs for electricity generation, for fuel used to power industrial plants and for feedstock used across many industrial processes,” said Justin Rose, a BCG principal and co-author of the report.
Manufacturers have plans to invest as much as $80 billion in U.S. chemical, fertilizer, steel, aluminum, tire and plastics plants, according to Dow Chemical. And the main reason, said George J. Biltz, Dow Chemical’s vice president for energy and climate change, “comes back to the massive competitive advantage the United States has with natural gas today.”
A changing conversation
The shale boom has not just changed corporate plans. It has also altered the way we think and talk about oil and gas.
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